If you’re an Arlington investor who owns multiple properties, then you know the importance of setting the best rental rates for your great spaces if you want to see lasting returns. This is a skill that still holds value regardless of whether we are facing a pandemic as a community or not!
However, as an expert in Arlington property management, we know that many investors and property owners alike are experiencing some fear—and may be inclined to panic when it comes to your rental rate right now.
Still, the wrong price can sink your best investment plans and result in lost revenue that could have been put towards your mortgage payment if you don't happen to be covered by the new CARES Act extensions. You also stand to lose when you overprice your rental home as a reaction to the current market: because the rate is too high, prospective renters will steer clear.
An empty property—no matter how valuable it is to you—won’t do you any good if no one calls it home! This is why finding the right rental rate—and then pricing your rental accordingly—is crucial. Use these tips from the professionals in Arlington property management when approaching your rental rate to ensure your great spaces are priced correctly.
Start With a Market Analysis
One of the best ways to determine your rent price is with the solid foundation of good research. Market analysis offers hard data about what renters are willing to pay in Arlington right now for great space like yours. Sometimes, completing a market analysis or rental analysis means having to do some good, old-fashioned 'legwork' to capture the data you need. Fortunately, the internet makes it possible for most property owners to accomplish this feat from the couch.
How Many Rental Homes Exist in Your Market?
The first thing you need to determine when calculating a market analysis is how many rental homes already exist in your area. This is important for a couple of reasons: it lets you know how hot the market is and what the supply and demand is for a given neighborhood in Arlington.
Single-Family vs. Multi-Family Rentals
The next thing you can analyze is the number of single-family homes versus multi-family units. If you have a high number of either of these, it could affect the amount of rent you can get for your property.
One thing that factors into the calculation is whether they are occupied or not. Another point to consider is that if there are a large number of multi-family units, it may impact the single-family market. As an Arlington property management company, we are keenly aware of the impact these factors make on your properties. This makes it an important step not to skip!
Are Those Homes Vacant or Occupied?
It’s critical to know how many of the homes for rent are vacant and how many are occupied. Obviously, if you have a high percentage of homes that are vacant, then the rate is too high, the market is cold, or it’s not a good area for a rental property. Generally, if the vacancy rate is higher than 11%, that means you may need to consider a rental price that's lower than what other comps are asking.
Average Rent Amount per Square Foot
By determining the average amount per square foot of similar homes in your market area, you can come up with a base rate for your property. The way to determine the average square footage is to take the rent amount and divide it by the number of square feet ($3,000 / 1,500 sq. feet = $2.00 per sq. foot).
You can then use this information strategically by performing this calculation on three different comparable properties in your market area to get the average. This is done by adding them together and dividing by three ($2.00 + $2.25 + $2.55= $6.80/3= $2.27 per sq. foot). This can give you an idea of how under or overpriced your great space is relative to the market rate.
What About Your Fees?
Most fees are not extremely high, but this is some important info to have when making your final determination about what to charge. This is one of those details you should definitely run by an Arlington property management professional to determine how relevant this is to your overall rental rate. In some markets, competitive fees can put you ahead of the pack!
Average Days on the Market
It’s vital to know the average number of days houses are on the market in your target area. This lets you know how viable the market is right now.
Even though these values may be skewed by the COVID-19 crisis right now, this metric still gives you an idea about the pricing of the current properties listed. If homes are on the market for too long, then either the prices are too high—or the market is not a hot one. Either way, you may need to make some adjustments to your rental rate if this is the case.
All This Research—for Free
Now that you see what all goes on into figuring out a rent analysis, you can see that it can become quickly overwhelming. If you don’t calculate things just right, you may get the rate wrong and be stuck with a home on the market too long or lose money.
As an Arlington property management company, we also know that you might be feeling pinched right now with everything going on concerning our community and COVID-19. That's why we're happy to offer you a rental analysis for free here at RentSimple! Take advantage of our expertise and put it to work for your rental home so that you can prioritize what matters most.